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Imapct of Gst on Agriculture Sector

Autor:   •  April 14, 2019  •  Study Guide  •  634 Words (3 Pages)  •  76 Views

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Agriculture is one of the primary employment sectors to millions across the country and becomes vital for the country's growth. India ranks third in the world with respect to the farm and agriculture output. In India spices are the largest producer, consumer and exporter. Agricultural exports are the fourth-largest exported principal commodity in terms of the percentage it constitutes 10% to the country's exports. Major taxation reforms like GST will definitely have an impact on the agricultural sector of Indian Economy.

The implementation of GST will have its impact on every sector as well as on the Indian Agricultural Sector as it contributes 16% to the national GDP and employs around 60% of the population. GST will improve the transparency, reliability and timeline of supply chain mechanism for the agricultural products, which have various interpretations.

Agricultural inputs, seeds, fertilizers, pesticides etc., are important for agriculture and their timely supply is vital for enhancing crop productivity. Under GST regime, the Government of India has proposed different rate such as 0%, 12%, 12%, 18% for different categories of inputs like seed, fertilizers, tractors, crop protection respectively.

This change in tax rate of present tax regime will result in change in price structure of inputs, imports and exports and ultimately farmer’s income and economy of the country. Overall when the cost of the cultivation increases this creates the pressure on the price of the agricultural product.


1. One of the major issues faced by the agricultural sector is the transportation of agriculture products across state borders. The GST solves this problem by laying down a framework for seamless and hassle free transportation of agricultural goods without the restrictions of multiple taxation. It would lead to creation of an integrated domestic market and enable the farmers to get remunerative prices on their agriculture commodities.

2. A Farmer will not be liable to registration formalities to that extent of supply which were produced out of cultivation


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